Enhanced equipment trust certificate structures

Abstract

The present invention is directed to EETC structures. In one embodiment, interest on the subordinate class (or classes) of certificates is paid before principal distributions on the senior class of certificates. In addition, the subordinate certificate holders may have the option to buy out senior equipment notes issued under defaulted indentures. Also, the above-cap liquidity facility may be sized only to cover interest amounts due above a capped rate for a shortened time period following an event of default. Following the shortened time period, the interest rates on the certificates may be capped at a fixed rate. In addition, for a time period following an event of default, the controlling party of the collateral may be prohibited from leasing the collateral unless (i) all equipment note payments owed are paid or (ii) the term of the lease is for a relatively short period of time, such as one year, for example. Additionally, following an event of default, a trustee report may be prepared for the benefit of, among others, the certificate holders that contains specific information related to the transaction. These enhancements to the conventional EETC structure have the benefit, among other things, of making the subordinate tranches more attractive to potential investors.

What is claimed is:  
     
         1 . A method, comprising issuing enhanced equipment trust certificates, wherein the certificates include a senior class and at least one subordinate class, and wherein interest on the subordinate class of certificates is to be distributed before principal on the senior class of certificates is to be distributed.  
     
     
         2 . The method of  claim 1 , wherein the issuing of the enhanced equipment trust certificates is performed by an airline to finance aircraft in the fleet of the airline.  
     
     
         3 . The method of  claim 1 , wherein the issuing of the enhanced equipment trust certificates is performed by an owner trust in a leveraged lease financing.  
     
     
         4 . The method of  claim 1 , wherein: 
 the certificates include first and second subordinate classes;    interest on the first subordinate class is to be distributed before interest on the second subordinate class is to be distributed; and    interest on the second subordinate class is to be distributed before principal on the senior class of certificates is to be distributed.    
     
     
         5 . A method, comprising: 
 selling a first class of enhanced equipment trust certificates of a first pass through trust;    the first pass through trust purchasing a first class of equipment notes issued by an entity;    selling a second class of enhanced equipment trust certificates of a second pass through trust; and    the second pass through trust purchasing a second class of equipment notes issued by an entity,    wherein the first class of certificates is senior to the second class of certificates, and wherein interest on the second class of certificates is to be distributed before principal on the first class of certificates is to be distributed.    
     
     
         6 . The method of  claim 5 , further comprising: 
 selling a third class of enhanced equipment trust certificates of a third pass through trust; and    the third pass through trust purchasing a third class of equipment notes issued by an entity,    wherein the second class of certificates is senior to the third class of certificates, and wherein interest on the third class of certificates is to be distributed before principal on the first class of certificates is to be distributed.    
     
     
         7 . The method of  claim 5 , wherein each of the first and second classes of equipment notes are issued under a separate indenture, and wherein holders of the second class of certificates have an option to purchase a first class equipment note issued under a defaulted indenture.  
     
     
         8 . The method of  claim 7 , further comprising a primary liquidity provider and an above-cap liquidity provider entering into a liquidity facility to cover interest payments on the first and second classes of certificates for a period of time following an event of default, and wherein the interest rates on the first and second classes of certificates are capped after the period of time.  
     
     
         9 . The method of  claim 8 , wherein the period of time is three months.  
     
     
         10 . The method of  claim 8 , wherein the first and second classes of certificates are secured by articles of collateral of the entity, and wherein, during a time period following an event of default by the entity, a controlling party of an article of collateral is prohibited from leasing the article unless (i) all expected equipment note payments are covered and (ii) a term of the lease does not extend a specified period of time.  
     
     
         11 . The method of  claim 10 , wherein the entity is an air carrier and the articles of collateral include aircraft.  
     
     
         12 . The method of  claim 10 , further comprising, following the event of default by the entity, obtaining a plurality of appraisals on the collateral.  
     
     
         13 . The method of  claim 12 , wherein expenses related to the appraisals are paid before interest on the first class of certificates is paid.  
     
     
         14 . The method of  claim 13 , further comprising, following the event of default by the entity, preparing a report, wherein the report includes the appraisals.  
     
     
         15 . The method of  claim 5 , further comprising, following an event of default by the entity, preparing a report including information selected from the group consisting of current certificate balances, expected accrued interest on the certificates, current equipment note balances, expected accrued interest on the equipment notes, section 1110 status of the collateral, maintenance status of the collateral, upcoming priority expenses, details of amount paid on current payment date, amounts owed to liquidity providers, amounts owed to a policy provider, and appraisals of the collateral.  
     
     
         16 . A method comprising, underwriting an offering of at least first and second classes of enhanced equipment trust certificates by an entity, wherein the first class of certificates is senior to the second class of certificates, wherein interest on the second class of certificates is to be distributed before principal on the first class of certificates is to be distributed, wherein the entity issues at least first and second classes of equipment notes, and wherein each equipment note is secured by an article of collateral of the entity.  
     
     
         17 . The method of  claim 16 , wherein the offering includes a third class of enhanced equipment trust certificates, and wherein the second class of certificates is senior to the third class of certificates, and wherein interest on the third class of certificates is to be distributed before principal on the first class of certificates is to be distributed.  
     
     
         18 . The method of  claim 16 , wherein each of the first and second classes of equipment notes are issued under a separate indenture, and wherein holders of the second class of certificates have an option to purchase a first class equipment note issued under a defaulted indenture.  
     
     
         19 . The method of  claim 18 , wherein interest rates on the first and second classes of certificates are capped after a period of time following an event of default by the entity.  
     
     
         20 . The method of  claim 19 , wherein, during a time period following an event of default by the entity, a controlling party of an article of collateral is prohibited from leasing the article unless (i) all expected equipment note payments are covered and (ii) a term of the lease does not extend a specified period of time.  
     
     
         21 . The method of  claim 20 , wherein, following the event of default by the entity, a plurality of appraisals on the collateral are obtained.  
     
     
         22 . The method of  claim 21 , wherein expenses related to the appraisals are paid before interest on the first class of certificates is paid.  
     
     
         23 . The method of  claim 22 , wherein, following the event of default by the entity, a report is prepared, wherein the report includes the appraisals.  
     
     
         24 . The method of  claim 16 , wherein, following an event of default by the entity, a report is prepared including information selected from the group consisting of current certificate balances, expected accrued interest on the certificates, current equipment note balances, expected accrued interest on the equipment notes, section 1110 status of the collateral, maintenance status of the collateral, upcoming priority expenses, details of amount paid on current payment date, amounts owed to liquidity providers, amounts owed to a policy provider, and appraisals of the collateral.  
     
     
         25 . A structure for offering enhanced equipment trust certificates, comprising: 
 an entity for offering at least first and second classes of enhanced equipment trust certificates, wherein the first class is senior to the second class;    a first pass through trust for holding a first class of equipment notes issued by the entity;    a second pass through trust for holding a second class of equipment notes issued by the entity; and    a subordination agent for distributing payments by the entity on the first and second classes of equipment notes, wherein interest payments on the second class certificates are paid by the subordination agent before principal payments on the first class of certificates.    
     
     
         26 . The structure of  claim 25 , wherein the entity is further for offering a third class of enhanced equipment trust certificates, wherein the second class of certificates is senior to the third class of certificates, and further comprising a third pass through trust for holding a third class of equipment notes issued by the entity, and wherein the subordination agent is further for distributing payments by the entity on the third class of equipment notes, and wherein interest payments on the third class of certificates are to be paid before principal payments on the first class of certificates.  
     
     
         27 . The structure of  claim 25 , wherein the entity is an air carrier, and the first and second classes of certificates are secured by aircraft of the air carrier.  
     
     
         28 . The structure of  claim 25 , wherein the entity is an owner trust in a leveraged lease financing.  
     
     
         29 . The structure of  claim 25 , wherein each of the first and second classes of equipment notes are issued under a separate indenture, and wherein holders of the second class of certificates have an option to purchase a first class equipment note issued under a defaulted indenture.  
     
     
         30 . The structure of  claim 25 , wherein interest rates on the first and second classes of certificates are capped after a period of time following an event of default by the entity.  
     
     
         31 . The method of  claim 25 , wherein, during a time period following an event of default by the entity, a controlling party of an article of collateral is prohibited from leasing the article unless (i) all expected equipment note payments are covered and (ii) a term of the lease does not extend a specified period of time.  
     
     
         32 . A method, comprising: 
 selling a first class of enhanced equipment trust certificates of a first pass through trust;    the first pass through trust purchasing a first class of equipment notes issued by an entity;    selling a second class of enhanced equipment trust certificates of a second pass through trust; and    the second pass through trust purchasing a second class of equipment notes issued by an entity,    wherein the first class of certificates is senior to the second class of certificates, wherein the each of the first and second classes of equipment notes are issued under a separate indenture, and wherein holders of the second class of certificates have an option to purchase a first class equipment note issued under a defaulted indenture.    
     
     
         33 . The method of  claim 32 , further comprising a primary liquidity provider and an above-cap liquidity provider entering into a liquidity facility to cover interest payments on the first and second classes of certificates for a period of time following an event of default, wherein the interest rates on the first and second classes of certificates are capped after the period of time.  
     
     
         34 . The method of  claim 33 , wherein the first and second classes of certificates are secured by articles of collateral of the entity, and wherein, during a time period following an event of default by the entity, a controlling party of an article of collateral is prohibited from leasing the article unless (i) all expected equipment note payments owed are covered and (ii) a term of the lease does not extend a specified period of time.  
     
     
         35 . The method of  claim 34 , further comprising, following the event of default by the entity, obtaining a plurality of appraisals on the collateral, and wherein expenses related to the appraisals are paid before interest on the first class of certificates is paid.  
     
     
         36 . The method of  claim 35 , further comprising, following the event of default by the entity, preparing a report, wherein the report includes the appraisals.  
     
     
         37 . The method of  claim 32 , further comprising, following an event of default by the entity, preparing a report including information selected from the group consisting of current certificate balances, expected accrued interest on the certificates, current equipment note balances, expected accrued interest on the equipment notes, section 1110 status of the collateral, maintenance status of the collateral, upcoming priority expenses, details of amount paid on current payment date, amounts owed to liquidity providers, amounts owed to a policy provider, and appraisals of the collateral.  
     
     
         38 . A method, comprising: 
 selling a first class of enhanced equipment trust certificates of a first pass through trust;    the first pass through trust purchasing a first class of equipment notes issued by an entity;    selling a second class of enhanced equipment trust certificates of a second pass through trust, wherein the first class of certificates is senior to the second class of certificates;    the second pass through trust purchasing a second class of equipment notes issued by an entity; and    a primary liquidity provider and an above-cap liquidity provider entering into a liquidity facility to cover interest payments on the first and second classes of certificates for a period of time following an event of default, wherein the interest rates on the first and second classes of certificates are capped after the period of time.    
     
     
         39 . The method of  claim 38 , wherein the first and second classes of certificates are secured by articles of collateral of the entity, and wherein, during a time period following an event of default by the entity, a controlling party of an article of collateral is prohibited from leasing the article unless (i) all expected equipment note payments owed are covered and (ii) a term of the lease does not extend a specified period of time.  
     
     
         40 . The method of  claim 39 , further comprising, following the event of default by the entity, obtaining a plurality of appraisals on the collateral, and wherein expenses related to the appraisals are paid before interest on the first class of certificates is paid.  
     
     
         41 . The method of  claim 40 , further comprising, following the event of default by the entity, preparing a report, wherein the report includes the appraisals.  
     
     
         42 . The method of  claim 40 , further comprising, following an event of default by the entity, preparing a report including information selected from the group consisting of current certificate balances, expected accrued interest on the certificates, current equipment note balances, expected accrued interest on the equipment notes, section 1110 status of the collateral, maintenance status of the collateral, upcoming priority expenses, details of amount paid on current payment date, amounts owed to liquidity providers, amounts owed to a policy provider, and appraisals of the collateral.  
     
     
         43 . A method, comprising: 
 selling a first class of enhanced equipment trust certificates of a first pass through trust;    the first pass through trust purchasing a first class of equipment notes issued by an entity;    selling a second class of enhanced equipment trust certificates of a second pass through trust, wherein the first class of certificates is senior to the second class of certificates;    the second pass through trust purchasing a second class of equipment notes issued by an entity,    wherein the first and second classes of certificates are secured by articles of collateral of the entity, and wherein, during a time period following an event of default by the entity, a controlling party of an article of collateral is prohibited from leasing the article unless (i) all expected equipment note payments owed are covered and (ii) a term of the lease does not extend a specified period of time.    
     
     
         44 . The method of  claim 43 , further comprising, following the event of default by the entity, obtaining a plurality of appraisals on the collateral, and wherein expenses related to the appraisals are paid before interest on the first class of certificates is paid.  
     
     
         45 . The method of  claim 44 , further comprising, following the event of default by the entity, preparing a report, wherein the report includes the appraisals.  
     
     
         46 . The method of  claim 44 , further comprising, following the event of default by the entity, preparing a report including information selected from the group consisting of current certificate balances, expected accrued interest on the certificates, current equipment note balances, expected accrued interest on the equipment notes, section 1110 status of the collateral, maintenance status of the collateral, upcoming priority expenses, details of amount paid on current payment date, amounts owed to liquidity providers, amounts owed to a policy provider, and appraisals of the collateral  
     
     
         47 . A method, comprising: 
 selling a first class of enhanced equipment trust certificates of a first pass through trust;    the first pass through trust purchasing a first class of equipment notes issued by an entity;    selling a second class of enhanced equipment trust certificates of a second pass through trust, wherein the first class of certificates is senior to the second class of certificates;    the second pass through trust purchasing a second class of equipment notes issued by an entity; and    following the event of default by the entity, obtaining a plurality of appraisals on the collateral, and wherein expenses related to the appraisals are paid before interest on the first class of certificates is paid.    
     
     
         48 . The method of  claim 47 , further comprising, following the event of default by the entity, preparing a report, wherein the report includes the appraisals.  
     
     
         49 . A method, comprising: 
 selling a first class of enhanced equipment trust certificates of a first pass through trust;    the first pass through trust purchasing a first class of equipment notes issued by an entity;    selling a second class of enhanced equipment trust certificates of a second pass through trust, wherein the first class of certificates is senior to the second class of certificates;    the second pass through trust purchasing a second class of equipment notes issued by an entity; and    following an event of default by the entity, preparing a report including information selected from the group consisting of current certificate balances, expected accrued interest on the certificates, current equipment note balances, expected accrued interest on the equipment notes, section 1110 status of the collateral, maintenance status of the collateral, upcoming priority expenses, details of amount paid on current payment date, amounts owed to liquidity providers, amounts owed to a policy provider, and appraisals of the collateral.    
     
     
         50 . A method comprising, acting as a placement agent for at least first and second classes of enhanced equipment trust certificates by an entity, wherein the first class of certificates is senior to the second class of certificates, wherein interest on the second class of certificates is to be distributed before principal on the first class of certificates is to be distributed, wherein the entity issues at least first and second classes of equipment notes, and wherein each equipment note is secured by an article of collateral of the entity.